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On 20 December 2017, Treasury released a consultation paper seeking industry feedback in relation to the principles which should be used to assess the early release of benefits from superannuation (Consultation Paper). The Treasury noted that the rules governing early release of superannuation benefits have not changed substantially since 1997. Four principles to guide the circumstances for early release have been identified – being “preservation”, “genuine hardship”, “last resort” and “fair and effective”. It seeks industry feedback in relation to these principles, as well as the following specific early release scenarios:

Compassionate grounds;

Severe financial hardship; and

Victims of crime compensation.

According to the Consultation Paper, in 2016/17 a significant portion of early release on compassionate grounds was for "medical treatment and transport (comprising around 72 per cent of funds approved for release), and mortgage payments (comprising around 18 per cent of total funds approved)".

On 21 December 2017, Treasury released the Ramsay Review’s final report into Australia's dispute resolution and complaints framework titled "EDR Review Supplementary Final Report" (Report). The Report comes as a result of the Government’s expanded terms of reference for the Ramsay Review and makes “four recommendations on the establishment of a limited and carefully targeted Compensation Scheme of Last Resort (CSLR) to cover future unpaid compensation in parts of the financial services sector”. The Report notes that a CSLR is required as “there is evidence of a significant problem of compensation not being paid” in the financial services sector. The Report recommends that a CSLR should:

“initially be restricted to financial advice failures”;

“be restricted to consumers and small businesses”;

"only consider claims after a decision has been made by AFCA, a Court or tribunal and that claim “remains unpaid after reasonable steps”; and

“be funded by financial firms engaged in the types of financial services covered by a CSLR”.

In an associated media release, the Minister for Revenue and Financial Services, Kelly O’Dwyer, announced that the Government would defer its consideration of and response to, the Report until after the Royal Commission has concluded. The Minister recognised that “the Royal Commission will examine many of the issues that have been considered as part of the [Report]”. However, this deferral will not impact the establishment of the Australian Financial Complaints Authority.

Legislation

Exposure draft of new Bill released - Design and Distribution Obligations and Product Intervention Power

On 21 December 2017, Treasury released an exposure draft of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2017 (Bill). According to the exposure draft Explanatory Memorandum, the Bill proposes to amend the Corporations Act 2001 to introduce:

"design and distribution obligations in relation to financial products". These are aimed at improving "consumer outcomes by ensuring that financial services providers appropriately promote the provision of suitable financial products to consumers of those products"; and

a "product intervention power for ASIC to prevent or respond to significant consumer detriment". This will allow ASIC to "make a range of orders prohibiting specified conduct".

On 11 January 2018, Kelly O'Dwyer MP, the Minister for Revenue and Financial Services, issued a media release announcing the release for public consultation of draft legislation and a consultation paper entitled ‘Superannuation Taxation Integrity Measures’.

the consultation paper covers two superannuation taxation measures that were announced in the 2017-18 Budget and support the integrity of the Government’s comprehensive suite of superannuation taxation reforms: the first measure includes a member’s share of the outstanding balance of a Limited Recourse Borrowing Arrangement (LRBA) in their total superannuation balance (TSB) and the second measure ensures that non-arm’s length expenditure is taken into account when determining whether the non-arm’s length income (NALI) taxation rules apply to a transaction;

the measures are intended to ensure that LRBAs or related party transactions cannot be used to circumvent contribution caps - they are not intended to prevent the use of LRBA; and

the consultation paper explains how the measures are intended to operate and seeks feedback on whether they meet their policy objectives; whether their objectives could be achieved in some other way; and what may be the unintended consequences of the measures.

On 22 January 2018, it was announced in a media release that the Royal Commission into banking, superannuation and financial services will hold an initial public hearing in Melbourne on Monday 12 February 2018. According to the media release, "Commissioner Hayne and Senior Counsel Assisting will make short opening statements..[n]o witnesses will be called". The Royal Commission has also prepared Practice Guideline 1 to explain "the procedures for establishing the conduct of the Commission".

Legislation

Exposure draft of new Bill released - superannuation guarantee integrity

On 24 January 2018, Treasury released for public consultation an exposure draft of the Treasury Laws Amendments (Taxation and Superannuation Guarantee Integrity Measures) Bill 2018. According to the exposure draft Explanatory Material, the Bill intends to amend the Taxation Administration Act 1953 to allow the ATO to:

"issue directions to an employer who fails to comply with their [SG] obligations", directing the employer to "undertake an approved course relating to their superannuation guarantee obligations" or to "pay unpaid and overdue superannuation guarantee charge liabilities";

"disclose [to affected employees] information that relates to a failure or a suspected failure by an individual's employer...to comply with their [SG] obligations";

extend "Single Touch Payroll reporting requirements so they apply to all employers, regardless of the number of employees";

"provide superannuation providers with a grace period for correcting false or misleading statements in relation to member information statements without giving rise to penalties"; and

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